PPP is about re­source ex­change and in­ter­de­pen­dence

Business Mirror - - FRONT PAGE - PPP Lead Al­berto C. Agra

ARE the re­sources of gov­ern­ment suf­fi­cient to be able to un­der­take all in­fras­truc­ture projects and pub­lic ser­vices? What are the con­tri­bu­tions of gov­ern­ment and the pri­vate sec­tor in a pub­licpri­vate part­ner­ship (PPP)? What is in it for the peo­ple, gov­ern­ment and the pri­vate sec­tor when it par­tic­i­pates in a PPP? Should there be a triple win ar­range­ment?

At the project level, a PPP is a con­trac­tual ar­range­ment be­tween the gov­ern­ment and the pri­vate sec­tor to de­liver pub­lic in­fras­truc­ture and/or pub­lic ser­vices, where each party as­sumes spec­i­fied func­tions, bears cer­tain risks, pro­vides con­tri­bu­tions, per­forms par­tic­u­lar obli­ga­tions, and earns ben­e­fits and rev­enues. With­out the con­tri­bu­tions, sup­port, par­tic­i­pa­tion and re­sources of each party and ev­ery stake­holder, there can be no fea­si­ble PPP.

Gov­ern­ment re­sources in a PPP can be a con­ces­sion or fran­chise, sub­sidy, funds, land and per­son­nel, with­out which, there can be no vi­able PPP. The pri­vate sec­tor can con­trib­ute the cap­i­tal, ex­per­tise, tech­nol­ogy and man­power, with­out which, there can be no PPP.

Thus, the relationship be­tween them is one of re­source ex­change and in­ter­de­pen­dence. Ac­cord­ing to Pf­ef­fer and Salan­cik, in­ter­de­pen­dence ex­ists when­ever one ac­tor does not en­tirely con­trol all of the con­di­tions nec­es­sary for the achieve­ment of an ac­tion or for ob­tain­ing the out­come de­sired from the ac­tion. Gov­ern­ment must be able to trans­act with el­e­ments of the en­vi­ron­ment, i.e., busi­ness sec­tor, civil so­ci­ety and or­di­nary cit­i­zens, in or­der to ob­tain the re­sources nec­es­sary for sur­vival and per­for­mance of its man­date.

It is for th­ese reasons that the pub­lic sec­tor needs the pri­vate sec­tor, and vice versa since they are not self- con­tained and self- suf­fi­cient or­ga­ni­za­tions. A part­ner­ship is not one-sided or lop­sided.

In a PPP, there is no competition be­tween the par­ties. There should

be sym­bi­otic relationship based on trust and re­source ex­change. In a PPP, af­ter the PPP con­tract has been awarded, there is ei­ther a mo­nop­oly or monop­sony.

In the bid­ding process, there is competition “for” the mar­ket, but af­ter the award, there is no competition “in” the mar­ket.

Surely, one party can­not dom­i­nate, or have con­trol over the other, save what is pro­vided and agreed upon in the PPP con­tract. Re­source ex­change is crit­i­cal in a PPP, where the ef­fects and relationship are mod­er­ated by the PPP con­tract, the bid doc­u­ments and the pub­lic good.

How­ever, in a sys­tem of in­terde- pen­dence, the iden­tity of each party re­mains in­tact. The gov­ern­ment can­not ab­di­cate its duty to reg­u­late, set poli­cies, “steer” the project, en­sure de­liv­ery of ba­sic ser­vices, and pro­tect and pro­mote the in­ter­est of the peo­ple. On the other hand, the pri­vate sec­tor can­not en­ter into con­tracts that will harm or cause dis­ad­van­tage to its share­hold­ers. For the con­sumers, they ex­er­cise their freedom to use or not to use the fa­cil­ity, and to sup­port or op­pose a project.

In in­ter­de­pen­dence and re­source ex­change, there must be a triple win or ben­e­fit sit­u­a­tion on the part of the gov­ern­ment, the pri­vate sec­tor and the peo­ple, oth­er­wise, there is no reason to col­lab­o­rate or sup­port a part­ner­ship. Win- win- win is both a com­mit­ment and a challenge.

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